Stock Market 101: PSE Dividends

In the world of investing, dividends serve as additional income for shareholders, offering a potential source of passive earnings and a key component of long-term wealth generation. As you delve into investing in the Philippine Stock Exchange (PSE), understanding the significance of dividends becomes crucial to unlocking the full potential of your stock market journey.

Stock Market 101: PSE Dividends

What are dividends?

At its core, a dividend represents a distribution of a company’s profits to its shareholders. When a company generates excess earnings, it has the option to allocate a portion of those profits as dividends to reward its shareholders. 

Dividends can be paid in the form of cash, additional shares of stock, or other tangible benefits, depending on the company’s policy. Dividends also provide a tangible measure of a company’s financial health and can signal its stability and potential for long-term growth.

Types of Dividends

  • Cash Dividends represent a distribution of the company’s earnings to shareholders in the form of monetary funds, which is the prevailing and widely adopted method of dividend allocation.
  • Stock Dividends entail to shareholders are provided with additional company shares instead of receiving cash dividends. This alternative approach is typically communicated to stockholders as a percentage increase in their ownership of shares.

Terms of Dividend Payments

  1. Date of Record

Also known as the record date, it is the specific date set by a company to determine which shareholders are eligible to receive a dividend. Shareholders who are recorded as owners of the stock on the date of record will be entitled to the declared dividend. Anyone who purchases shares after the date of record will not receive the upcoming dividend payment.

  1. Payment Date

This refers to the date on which the dividend is actually paid to eligible shareholders. It is the day when the company distributes the dividend amount to the shareholders’ accounts or issues physical checks.

  1. Ex-Date or Ex-Dividend Date

The ex-date, often known as the “without dividend” date, is the specific day on which or after which shares of a stock can be traded without entitlement to the recently declared dividend. If investors buy shares on or after the ex-date, they will not receive the upcoming dividend payment. Usually, the ex-date is scheduled two business days ahead of the date of record to allow ample time for trade settlement.

  1. Declaration Date

The declaration date is when the company’s board of directors makes an official announcement regarding the dividend payment. It is the date when the company publicly discloses the dividend amount and provides essential information, including the date of record, ex-date, and payment date. It is an important event for shareholders as it provides them with information about the upcoming dividend distribution.

These dates and terms are important for investors to understand when considering dividend investments and planning their trading activities around dividend distributions. It is advisable to check the company’s announcements and consult financial sources for the specific dates and details related to dividend payments for individual stocks.

Example of Dividends

Company Type of StockType of DividendDividend RateEx-Dividend DateRecord DatePayment Date
Robinsons Retail Holdings, Inc.COMMONCashP2.00May 17, 2022May 20, 2022Jun 10, 2022
JG Summit Holdings, Inc.COMMONCashP0.40May 23, 2022May 26, 2022Jun 14, 2022
Filinvest Development CorporationCOMMONCashPhp0.07014May 17, 2022May 20, 2022Jun 14, 2022

Remember to conduct thorough research, seek professional advice if needed, and make informed investment decisions based on your financial goals and risk tolerance.
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